Asian session: The euro headed

The euro headed for its first five- day drop in three weeks before data forecast to show the region’s economy shrank as its debt crisis remained unresolved. Gross domestic product in the euro area probably contracted 0.2 percent in the three months through June after being unchanged in the first quarter, according to the median forecast of economists in a Bloomberg News survey. The European Union’s statistics office will report the figure on Aug. 14. French industrial production may have risen 0.1 percent in June from May, when it dropped 1.9 percent, a separate survey of economists showed before the data are released today.

Economists polled by the ECB reduced their 2013 growth projection to 0.6 percent from 1 percent, according to the central bank’s monthly bulletin released yesterday. The region’s economy is likely to shrink 0.3 percent this year. Growth has slowed as a sovereign-debt crisis prompted five of the trading bloc’s 17 states to seek international bailouts.

The dollar and yen rose against their major counterparts as signs of slowing growth in China sent shares lower, boosting demand for refuge currencies. China’s overseas sales increased 1 percent in July from a year earlier, following an 11.3 percent increase in June, the customs bureau said in a statement today in Beijing. That compared with the median estimate of economists for an 8 percent gain.

EUR / USD: during the Asian session the pair fell below $1.2300.

GBP / USD: during the Asian session the pair fell to $1.5615 (MA (200) H1).

USD / JPY: during the Asian session the pair traded in a range Y78.45-Y78.65.

European data sees the final German HICP data for July. France data at 0645GMT sees industrial output for June, which is expected to come in at -0.1% m/m, -1.8% y/y. The IEA monthly oil market report is due at 0800GMT. UK data at 0830GMT includes PPI as well as Q2

Construction Output data. US data for Friday starts at 1230GMT with the July Import / Export Price Index. Later data sees the 1900GMT release of the Treasury Budget Statement where the Treasury is expected to post a $103.0 billion budget gap in July, compared with the $129.4 billion gap in July 2011. US C&I loans data rounds things off, at 2015GMT.